Network Charging Reforms Factsheet: Targeted Charging Review

Ofgem recently published its decision on the Targeted Charging Review (TCR) Significant Code Review (SCR) and issued a direction to the network companies to progress code modifications to give effect to the conclusions. There are two main elements to the review:

  • Balancing Services Use of System (BSUoS) charges for embedded generation
  • ‘Residual’ Transmission Network Use of System (TNUoS) and Distribution Use of System (DUoS) charges – the parts of TNUoS and DUoS which ensure network companies recover their allowed revenues after Forward Looking Charges (which aim to send cost reflective signals to users encouraging them to use the networks in a particular way) have been levied

This factsheet summarises the key changes which will be implemented following Ofgem’s decision on the TCR, noting that Forward Looking Charges are also under review under the Network Access and Forward Looking Charges SCR.

Supporting notes:

Acronyms and terms

  • TCR – Targeted Charging Review
  • SCR – Significant Code Review
  • DUoS – Distribution Use of System
  • TNUoS – Transmission Network Use of System
  • BSUoS – Balancing Services Use of System
  • FLC – Forward Looking Charges which send signals to users about the effect of their behaviour, encouraging them to use the networks in a particular way
  • Residual – charges which recover the fixed costs of providing existing pylons and cables
  • TGR – Transmission Generator Residual
  • DG – Distributed Generation
  • EHV – Extra high voltage (>22kV)
  • HV – High voltage (1-22kV)
  • LV – Low voltage (<1kV)
  • DNO – Distribution Network Operator
  • Large customers – those with an agreed capacity, typically Current Transformer (CT) metered
  • Small customers – those without an agreed capacity, typically Whole Current (WC) metered

Total cost data all relates to 2018/19, and uses the following sources:

  • DUoS – DNO published Common Distribution Charging Methodology models
  • TNUoS – National Grid’s 2018/19 TNUoS charges report
  • BSUoS – Current BSUoS data published by National Grid
This factsheet summarises the key changes which will be implemented following Ofgem’s decision on the TCR, noting that Forward Looking Charges are also under review under the Network Access and Forward Looking Charges SCR.
Commercial and market outlook Regulation and policy
Andrew Enzor

Andrew Enzor

Related thinking

Regulation and policy

Ofgem raises modifications ahead of RCC and new switching arrangements

The latest edition of our Faster Switching Service Report due to be issued this week includes the latest developments in Ofgem’s Switching Programme and the associated Retail Energy Code (REC). Launched in November 2019, the Retail Code Consolidation (RCC) Significant Code Review (SCR) set out Ofgem’s intention to amalgamate the...

Regulation and policy

Electricity transmission charging reform – overtaken by changing priorities?

Charging for the transmission network is never out of the development process for long. From major reviews, such as that initiated under Project Transmit in 2010, to significant reforms such as removing the triad benefit from distributed generation in 2018, and a host of smaller developments, change seems the only...

Low carbon generation

Up north and down south – trends for generator TNUoS charging

The topic of generator Transmission Network Use of System (TNUoS) is becoming a subject of increasing interest for stakeholders as regulation, policy, and the generation mix create potential volatility for future charging trends. The significant costs posed through TNUoS are an important consideration for generators, with high variability between regions...

Commercial and market outlook

April showers bring DUoS for every half hour

Almost two years ago, Ofgem approved DCP268 DUoS Charging Using HH Settlement Data, which will move existing non-Half Hourly (NHH) settled demand customers onto time-based Half Hourly (HH) Distribution Use of System (DUoS) unit rate charges. With the modification to be implemented in the DCUSA on 1 April, we revisit...

Low carbon generation

New transmission charge forecast will help generators managing cost uncertainty and volatility

Transmission network use of system (TNUoS) charges represent a significant proportion of operating costs for many renewables generators, often exceeding 50% of annual running costs. For some, as recently highlighted by SSE in a recent report and to Members of the Scottish Parliament, they could present a barrier to investment in generation...

Net zero corporates and ESG

Major energy policy and regulatory changes discussed in our December Net Zero Business forum

On 10 December 2020, Cornwall Insight hosted its Net Zero Business Forum. Held four days before the release of the UK government’s Energy White Paper, the focus was on the Prime Minister’s 10-point plan, the Spending Review and the National Infrastructure Strategy. Head of Relationship Development Robert Buckley and Head...

Regulation and policy

A look back at 2020 part 4

As we take our first steps into 2021, we take our final look back at the biggest developments in the UK energy markets in 2020, setting us up for the significant year ahead. Ofgem issued its decarbonisation Action Plan on 3 February as Jonathan Brearley became Ofgem CEO, setting out...

Regulation and policy

Ofgem’s Network Access and Forward Looking Charges review – should I be interested

Spoiler – if you are a distribution connected generator, yes, In a big way Ofgem is currently progressing one of its biggest overhauls of network charging; with the Targeted Charging Review having only recently concluded that is quite a statement. We have already seen the value to distribution connected generators...